It has been ten years since the federal government began penalizing hospitals for what it deemed to be preventable readmissions under its Hospital Readmission Reduction Program (HRRP). The federal statute, Section 1886(q) of the Social Security Act, requires that the Secretary of the U.S. Department of Health and Human Services reduce payments to subsection (d) hospitals for excess readmissions. The Centers for Medicare and Medicaid (CMS) calculate the payment reduction and component results for each hospital based on a hospital’s performance during a rolling performance period.
The reductions are assessed to all Medicare fee-for-service base operating diagnosis-related group payments during the October 1st to September 30th fiscal year. There is a 3% cap on the payment reduction which amounts to a payment adjustment factor of 0.97. There is a review and correction period under the HRRP for any discrepancies pertaining to the payment reduction calculations and component results. Once this period is concluded, the CMS issues a report on the HRRP data in the Inpatient Prospective Payment System/Long-Term Care Hospital Prospective Payment System Final Rule Supplement Data File housed on the CMS website (CMS.gov). The same HRRP data is also reported in the Provider Data Catalog and is archived in the CMS HRRP Archives.
Reasons for Readmissions
Hospital readmissions often result from several common causes. One prominent reason is the lack of patient engagement following discharge and the patient’s subsequent lack of compliance to their treatment plans. This could include not taking their medications, making and keeping doctor appointments, or simply not understanding the severity of their conditions and treatments.
Another factor contributing to readmissions are the complications associated with certain medical conditions such as sepsis, hypertension, heart disease, urinary tract infections, chronic kidney disease with heart failure, pneumonia, myocardial infarction, acute kidney failure and chronic obstructive pulmonary disease. Many patients with these conditions are readmitted within 30 days of discharge.
Sub-par transition of care also contributes greatly to readmissions. When a patient is discharged, there should be a substantial transition of care plan in place which encompasses medical appointments, medications, and related schedules for taking them, home visits by nurse case managers and other healthcare professionals (i.e., physical therapists, occupational therapists, social workers, etc.), and other follow-up care instructions. When a sound transition of care plan is in place, preventable readmissions can be controlled.
For some patients, understanding their discharge instructions is at the root of their readmissions. They may not have been properly instructed. or they were unable to understand the instructions and therefore unable to comply with them. This is not uncommon for older people, those with language barriers, or others living alone without any family support or caregiver on hand.
Medicare Penalized 2,499 Hospitals for High Readmissions
For these reasons and for what it deemed excessive patient readmissions, 47% of the nation’s hospitals were penalized by Medicare. The average penalty was a 0.64% reduction in payment for each Medicare patient from October 1, 2021 through September 30, 2022. Based on data from 2018 reported by Congress’ Medicare Payment Advisory Commission (MedPAC),the fines averaged $217,000. The government is estimated to save $521 million as a result of these penalties. In total, 82% of the 3,046 hospitals evaluated by Medicare received some penalty for readmissions.